The Regulatory Environment - Labour Laws
India is a member of the International Labour Organisation and
complies with conventions which it has ratified. It has enacted
comprehensive legislation to provide a good working environment for
labour and protect their interests. The government continously reviews
various labour laws in line with changing circumstances. The
following are the key labour laws:
- Industrial relations are regulated by the Industrial Disputes Act, which
provides for just and equitable settlement of disputes through
negotiations, conciliation, arbitration or adjudication.
- The Factories Act, 1948, regulates working conditions in factories. The
Act prescribes minimum standards for working conditions and facilities
related to manufacturing processes, handling and storage of materials,
discharge of effluents, fire precautions, working hours and health
- The Minimum Wages Act 1948, empowers the appropriate Governments to fix
and revise the minimum wages and allowances payable to workers and also to
regulate the conditions of work such as hours of work, overtime, etc. for
workers in the notified employment under their respective jurisdiction.
- The Payment of Bonus Act, 1956, requires payment of bonus to certain
categories of workers whose wages do not exceed Rs.2,500 per month. The
Act ensures payment of minimum bonus of 8.33 per cent per year, with maximum
bonus not to exceed 20 per cent of salary or wage earned during the
- The Payment of Gratuity Act requires the employer to pay gratuity to
certain categories of workers on termination of service. This Act applies
to all workers without any wage limit.
- The Employees' Provident Fund Act applies to workers whose wages do not
exceed Rs.3,500 per month in some industries and establishments. The
employer and the employee are required to make matching contributions of
8.33 per cent to 10 per cent of the employee's salary to the fund.
- The Employees' State Insurance Act covers sickness, maternity and
employment related injuries. The Act applies to workers whose wages do not
exceed Rs.3,000 per month.
- In addition to the above Acts, several states have enacted Shops and
Establishment Acts which regulate working hours, prescribe minimum
standards of working conditions and provide for overtime and leave salary
payments to workers in certain categories of shops and other
Centre for Monitoring Indian Economy, Bombay
Contact Addresses for More Information
Last updated: May 1995.